Logansport (IN) hires Oregon-based utilities consultant to review wholesale power proposals

Posted by Laura Arnold  /   April 24, 2016  /   Posted in Duke Energy, Indiana Municipal Power Agency (IMPA), Uncategorized  /   No Comments

City hires utilities consultant

Firm will review wholesale power proposals, help develop master plan

Logansport officials have hired an Oregon-based consultant to examine wholesale power proposals and help plan the future of local utilities.

The Logansport Board of Public Works and Safety approved an agreement with McCullough Research, out of Portland, Oregon, on Wednesday.

Logansport Mayor Dave Kitchell said after the April 20 meeting the firm will work on retainer for the city for $10,000 a year to provide a variety of utilities-related consulting services.

Kitchell and Logansport Deputy Mayor Mercedes Brugh serve on the board of public works and safety.

Brugh said in a statement she expects McCullough Research's analysis to exceed the approach taken by the Logansport Utility Service Board.

"The utility service board hired a law firm to review the wholesale power proposals," she wrote. "I heartily approve this hiring of a rate analyst to compare the proposals, McCullough is an expert on power in the Midwest."

News of McCullough Research's involvement came as a surprise to LMU officials, who hired Indianapolis-based law firm Lewis & Kappes to evaluate the wholesale power proposals.

"I have received no communication asking my opinion nor informing me of the project," LMU Superintendent Paul Hartman said of McCullough Research. "...Lewis & Kappes' scope of work allows them to review the wholesale power proposals from all aspects, including law, engineering, financial, and to hire experts as they see fit."

Logansport Utility Service Board President Dan Slusser said he remains confident in LMU's approach to the proposals, but isn't against McCullough Research's involvement.

"I don't think our board would have any problem with including everybody, including whatever consulting firm is hired, to review whatever Lewis & Kappes' recommendation is," Slusser said.

Duke Energy, Indiana Municipal Power Agency, KenEnergy, Morgan Stanley, NextEra and Southern Company submitted wholesale power proposals earlier this year.

LMU's wholesale power contract with Duke Energy Indiana expires at the end of 2018.

Hartman, Kitchell, Slusser and Logansport City Council President Teresa Popejoy had a conference call with Lewis & Kappes earlier this month. Hartman said at Wednesday night's utility service board meeting that the firm indicated more than one of the proposals meets the community's needs.

McCullough Research will also oversee the creation of a request for proposals for a generating plant, recommend what payments in lieu of taxes LMU should allocate to the city, provide input on rate structures, oversee a request for proposals for a county-wide Wi-Fi system billed through LMU and other services, according to the agreement.

"It's like a comprehensive plan for the utilities," Kitchell said.

McCullough Research worked for the city and LMU in the late 1990s, Kitchell also said. He praised Robert F. McCullough Jr., the firm's managing partner, for his "national perspective" on utilities.

In other news, the utility service board also:

• Heard from Hartman, who said electric rates will go down 0.002018 cents per kilowatt-hour through June now that LMU's power plant has closed. He also said 22 of the roughly 30 generating plant employees accepted LMU's severance offer, resulting in a total of about $1.1 million.

• Unanimously passed a resolution making certain records confidential and excepting them from disclosure.

Reach Mitchell Kirk at mitchell.kirk@pharostribune.com or 574-732-5130


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Relations between Logansport utilities and city officials are being tested as they prepare to choose among wholesale power proposals from six firms.

Duke Energy, the Indiana Municipal Power Agency, KenEnergy, Morgan Stanley, NextEra and Southern Company made pitches to provide Logansport Municipal Utilities with its electric needs, according to LMU Superintendent Paul Hartman.

LMU is contracted to receive its electricity from Duke Energy through 2018.

Lewis & Kappes, a law firm LMU hired, is currently vetting the proposals and will be finished with its findings by the middle of May.

In the meantime, utilities and city officials are facing several issues, Logansport Utility Service Board member Jay King said at the board's monthly meeting Tuesday.

He went on to express his disapproval of Jim Brugh, LMU's attorney appointed by Logansport Mayor Dave Kitchell.

"I think it's fair to note that while Jim Brugh sits behind us as an arm of the city's legal office, he's certainly not our attorney and he's made that very clear," King said. "He doesn't answer to us, he doesn't take direction from us, he has no interest in working with Paul [Hartman] in any particular way other than as the direction of the mayor."

The utility service board should get legal advice and legal representation from its attorney, King continued, neither of which he feels Brugh provides.

"I have a lot of respect for Jim and I think he's a good attorney but he has a specific agenda that he has been pushing for the last four years at least and any advice that we receive from his is tainted in that sense," King said.

King went on to call Brugh's comments to Duke Energy representatives at an event in Logansport in January "a gratuitous attack."

At the event, Brugh accused Duke Energy of having "secret conversations" with Hartman.

Brugh has also called for the public release of LMU's contract with the firm, which King said "invites a lawsuit" Tuesday.

"So just so we're all clear, we're all on the same page, we can't trust the advice we get from him and he doesn't represent us when he speaks in public," King said.

Brugh pointed out during King's comments that under "Robert's Rules of Order," which guides the conduction of meetings, "personal statements are out of order."

Brugh reiterated that sentiment in an interview after the meeting.

"People in public positions should keep their personal opinions to themselves," he said. "I'm trained and skilled in law and when a board member does not like my opinion, that opinion from a lay person doesn't mean anything."

He went on to call himself "an employee of the [city's] law department."

"I love this city," Brugh said. "I have the interests of the citizens, of all the consumers."

Kitchell defended Brugh in an interview, calling him a far better legal asset to LMU than the out-of-town lawyers it hired throughout the previous administration.

"It only generated bills, it didn't generate any power," Kitchell said of the hiring of those firms.

King addressed Kitchell in his comments at the meeting as well, accusing him of micromanaging LMU decisions.

Kitchell took issue with that in the interview too.

"I haven't asked for the authority to micromanage contracts like my predecessor," Kitchell said, referring to how the utility service board allowed former Mayor Ted Franklin to negotiate three power plant proposals throughout his term, none of which reached fruition.

King referred to Kitchell's role in reversing the firing of two LMU generating plant employees in February.

"Now I understand it's the charitable thing to do... but the truth of the matter is the two employees in question were hired until the plant closed and they knew it the first day they came to work," King said.

LMU closed its generating plant in January because it couldn't adhere to the latest federal emissions regulations.

Kitchell contested King on that as well.

"The utilities made it clear nobody was going to lose their job until April," he said in the interview.

King also expressed his disagreement with Kitchell's replacement of former utility service board member Mark Hildebrandt.

Kitchell appointed Mike Meagher in Hildebrandt's place last month to boost the board's representation of those who live in LMU's service area outside of Logansport.

While Logansport City Council voted down an ordinance regarding the removal of utility service board members without cause earlier this year, case law in Indiana has set a precedent that permits it.

"I think the board made it clear that our position was board members should only be removed for cause and the city council made it clear that that was their position as well," King said.

Reach Mitchell Kirk at mitchell.kirk@pharostribune.com or 574-732-5130

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